Custodial roth?

[fryjack2]

Does anyone have one for their children? 

I was reading about opening one and putting birthday money, etc into it now.   It was intriguing to me and thought I'd come here and ask if anyone has one for their children  

[jlt19]

No, but I'm intrigued. I've always said I'd love to open a Roth for each kid once they start to work. But if I could do it earlier that'd be awesome.

ETA: lol, guess that's actually what I had wanted to do, just didn't know the name of it. Darn. Too bad allowance isn't earned money!

[jlt19]

Ok so just read a bit more. The income has to be earned, but things like babysitting count. And the max is $6k/year like normal. So a kid has to earn that much. BUT an individual doesn't have to file taxes until earned income is $12,000. Sooooo.....

[Cappy]

I had no idea about custodial accounts. Good info. I feel like this page from Fidelity is really helpful at hitting all the points: www.fidelity.com/retirement-ira/roth-ira-kids

[sometimesrunner]

DS has one! We went with Fidelity because you can set it up online. With Vanguard, you have to call and I didn’t want to mess with that.

[sometimesrunner]

Sept 13, 2020 21:09:01 GMT -5 jlt19 said:

Ok so just read a bit more. The income has to be earned, but things like babysitting count. And the max is $6k/year like normal. So a kid has to earn that much. BUT an individual doesn't have to file taxes until earned income is $12,000. Sooooo.....

Babysitting would count, but if he receives over $400 that would be subject to self employment tax, so he would have to file.

[4speedy]

My kids each have one. We went with Vanguard, as well. My 14 year old has about $18k in hers and my 11 year old has about $7k in his. (DD is a much harder worker than DS)

[Cappy]

Sept 24, 2020 6:32:20 GMT -5 4speedy said:

My kids each have one. We went with Vanguard, as well. My 14 year old has about $18k in hers and my 11 year old has about $7k in his. (DD is a much harder worker than DS)

I'm blown away by these amounts. What a great start! How did you accomplish this? What kinds of work did your 11 year old do to have 7k in earned income? Any tips or tricks to share? 

[4speedy]

Sept 24, 2020 7:52:52 GMT -5 Cappy said:

Sept 24, 2020 6:32:20 GMT -5 4speedy said:

My kids each have one. We went with Vanguard, as well. My 14 year old has about $18k in hers and my 11 year old has about $7k in his. (DD is a much harder worker than DS)

I'm blown away by these amounts. What a great start! How did you accomplish this? What kinds of work did your 11 year old do to have 7k in earned income? Any tips or tricks to share? 

We live on 26 acres of woods so we started making homemade maple syrup several years ago.  We started out just making enough for friends and family and coworkers as gifts  but then my daughter begged to start her own business.  She put her younger brother to work.  The first year, they spent many weekends selling it at our farmers market.  My DD had been involved with 4H, so she had experience planning projects and asking local businesses for sponsorship.  She hated spending all her Saturdays at the market so she took it upon herself to ask a local farm to table  restaurant to buy it in bulk.  Now, most of her sales are made to that restaurant before the season ever starts.  They buy as much as she can produce.  After school, my kids will collect about 300 gallons of sap a day during the season.  It’s really hard work but making the syrup is fun.  The money in their accounts represents 3 seasons that they have worked but they haven’t made deposits in the last 2 years because we moved to Seoul with my husbands company.  They’ve made significant gains in their IRA’s due to the stock market since they had to put their business on hold.  The power of compound interest, and all that, lol.

[Cappy]

Sept 24, 2020 11:36:42 GMT -5 4speedy said:

Sept 24, 2020 7:52:52 GMT -5 Cappy said:

I'm blown away by these amounts. What a great start! How did you accomplish this? What kinds of work did your 11 year old do to have 7k in earned income? Any tips or tricks to share? 

We live on 26 acres of woods so we started making homemade maple syrup several years ago.  We started out just making enough for friends and family and coworkers as gifts  but then my daughter begged to start her own business.  She put her younger brother to work.  The first year, they spent many weekends selling it at our farmers market.  My DD had been involved with 4H, so she had experience planning projects and asking local businesses for sponsorship.  She hated spending all her Saturdays at the market so she took it upon herself to ask a local farm to table  restaurant to buy it in bulk.  Now, most of her sales are made to that restaurant before the season ever starts.  They buy as much as she can produce.  After school, my kids will collect about 300 gallons of sap a day during the season.  It’s really hard work but making the syrup is fun.  The money in their accounts represents 3 seasons that they have worked but they haven’t made deposits in the last 2 years because we moved to Seoul with my husbands company.  They’ve made significant gains in their IRA’s due to the stock market since they had to put their business on hold.  The power of compound interest, and all that, lol.

My heart is ready to burst! I LOVE this story. Your kids are so lucky you are teaching them so many valuable lessons in life, finance, saving, etc. From time to time I've considered how I can find a way to tap into DD#1's interests for some kind of similar venture (maybe a tiny Etsy shop or something) but this story is above and beyond. Thank you for taking the time to share.